CasesStrategy DocumentsC02/2011Public AffairsZara: Managing chain ofvalue and driving CSRwith consumers                   ...
Managing chain of        on attracting fashion traffic with copied designs          Zara: Business Modelvalue and driving ...
Managing chain of        Inditex Sustainability Model                                                       There are thre...
©2011, Corporate Excellence - Centre for Reputation LeadershipBusiness foundation created by large companies to profession...
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Zara, managing chain of value and driving csr with consumers


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Spain’s fast fashion retailer Zara and its owner Inditex Group have revolutionised the industry, Zara became one of the few Spanish brands recognised globally. But is it a socially responsible brand?

Implementing CSR means integrating social, labour and human rights concerns into the management of the company in such a way that the Company’s policies, strategies, procedures and business models are developed in line with these concerns. In the case of Zara, the CSR strategy should provide an answer to the following important question: what kind of society do we want to build and what is the role of companies in this society?

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Zara, managing chain of value and driving csr with consumers

  1. 1. CasesStrategy DocumentsC02/2011Public AffairsZara: Managing chain ofvalue and driving CSRwith consumers The fast fashion Spanish company Zara and its Inditex Group has become a milestone after revolutionizing its sector and has succeeded in becoming one of the few brands in the country which stands among the best in class in the world but, is it a responsible brand, has it been a pioneer in the control of the supply chain or in the establishment of the ecological label? There are several consumer trends in recent Consumers, in the opinion of Jose Luis Nueno, years which are especially influencing in a special professor at the Marketing Department of IESE, ask manner the relationship that companies establish companies to collaborate in the solution of social with their stakeholders, especially with their problems which, they consider, governments can consumers and clients: no longer solve and, many of them, do not change their attitude nor their actions in relation to how • Convergence of middle class: consumer expect them to. exponential population growth and narrowing of social classes. What is Zara’s secret • Low cost/free era: price is a Zara’s strategy has always been to drive the creation key competitive factor. of value for clients. Today it is one of the most • Changes in behavior: adolescents are profitable fashion businesses in the world. The those who do not work yet, although leading fashion brand of Inditex Group opened they are more than 25 or 30 years old. its first store in La Coruna in 1975 and began by • Sustainability: different use of natural, human, designing and selling dressing gowns to be worn at social, financial and productive resources. home. Today, there are Zara stores in international cities such as New York, Paris, Tokio or Buenos These trends are fixing FMCG brands behavior in Aires with a total of nearly five thousand. National the market, but especially this last one has forced barriers are not an obstacle for a globalized fashion companies to review their corporate policies, to culture such as Zara’s but, how did they achieve it? reconsider the way in which they engage with their What is their secret? suppliers (a common source of problems for global brands, as in the famous cases of Nike, Nestle or Zara is a brand which sells three types of fashion: Cargil) and, above all, with their clients. basic, fast and seasonal. The model, actually, is basedDocument prepared by Corporate Excellence with reference to, among other sources, the intervention of Jose Luis Nueno (professor inthe Marketing Department at IESE) during the sessions of the Executive Education Program “Making Social Responsibility Work: TheCornerstone of Sustainable Business” organized by the IESE Business School in Barcelona in July 2011.
  2. 2. Managing chain of on attracting fashion traffic with copied designs Zara: Business Modelvalue and driving placed on the market in a very short time, in orderCSR with consumers:the case study of Zara to sell fundamentally, basic and seasonal fashion. Young customers Global Inditex was one of the first manufacturers in the world Mobility reports which implemented in integrally the concept of daily vertical integration, based on logistics and the whole No Innovation advertising, of the operation. Most of the production is carried in product Zara presence at delivery key places out in it completely automated factories and the tailoring is subcontracted to independent workshops, Good Causes which allows for great flexibility to increase or reduce Quality / new trends Reasonable Little in fashion production according to demand. or no stock ‘Consumers ask companies Source: Knowledge Management, 2010. to collaborate in the solution of social problems which, in customers, something that does not seem very they consider, governments responsible? Can its main social contribution be limited to maintenance of its immediate surrounding, can no longer solve.’ its community, jobs created and a type of determined professionals that would not have otherwise existed? The stores are located in city center streets, are owned by the company, thereby having a total The main milestones in the implementation of CSR control on its image and sales data. The sores are the in Inditex are as follows: best display and advert for Zara, its brand image is its store. Its information is permanently transmitted • 1995: establishment of an environmentally to design teams and the stores regularly receive friendly policy commitment and creation of consignments of garments in a short space of time, a specific area for the CSR management. speeding up the renewal of stock. The majority of • 1996-1998: first plans for energy efficiency models (about 20,000 a year) are in the market and cogeneration plant put into operation. no more then two weeks, in that way consumers • 1999: plans for emission control, purchase while stocks last. dumping and waste. • 2001: internal code of conduct centered on The key of Zara’s success is, therefore, to have at responsibility towards employees, partners, its disposal a system of rapid response, a leading suppliers and society, and the first Spanish edge technology, to have great experience at the company to sign the Global Compact. point of sale, anticipate the competition, neutralize the impact of the changes on consumers which • 2002: admission to the Dow Jones we described at the beginning and, above all, the Sustainability Index and GRI adoption. systemic nature of its competitive advantage: its way of operating and working is the advantage The company uses, in this sense, a triple system itself, therefore, the most difficult to copy. to manage the sustainability and responsibility of its business model, following the traceability of its From being a company of accessible fashion in the vertical and horizontal integration model form its 70s, it became a disintermediated company in the origin to the final presentation to clients, what is 80s, a quick company in the 90s and in search of known as the 3 pillars of responsible behavior in the sustainability in 2000. How does it try to achieve it, production chain: considering its model and its presence in so many countries with such a significant pressure in the 1. The DNA of its offices: tied to its employees market and on its clients? (legality, respect and diversity). 2. The DNA of its factories: tied to its suppliers Business model Young clients Daily world reports and business partners (transparency, legality No advertisement, presence in key placements and traceability). Provokes new trends in fashion Little or no stock 3. The DNA of its stores: tied to its clients (quality, Good price/quality relationship Innovation in security and health). products delivery Mobility Zara has achieved three great milestones in search for a management model and the most Zara’s socially responsible policy sustainable business: How do you combine a business model based on selling the maximum amount and producing as 1. Design of the business: creation of close as possible to the tastes of consumers, to the value for consumers, for society and sales needs? Doesn’t this provoke overconsumption Cases 2
  3. 3. Managing chain of Inditex Sustainability Model There are three ways to recognize ecologicalvalue and driving clothing using environment labels which certifyCSR with consumers:the case study of Zara that the textile products and the treatment used ar Cle o We ar t o are nature-friendly: ar t We ar Cle DNA TE RA 1. European Union green ecological label: applied r wea O Frameemen Agr RP s to all textile products except wall and er su ar to m ewo t pp CO onduct sto fC lie apartment coverings. Cle cu rs rk Code o Company 2. “Made in Green” stamp: certifies that the tegy l products do not contain harmful substances Stra menta Res ractice P pon s ty and that environment and labor rights have sta cie iron ff so sibl Env been respected. e UN I AgrFramew ial 3. Oeko-Tex Standard 100 badge: guarantees the eem ork Soc ment ent invest absence of harmful substances in textile products during their entire transformation process. Source: Zara, 2010. Zara, for its part, began to include some years ago in its collections items that had been made from raw especially for the community. materials cultivated without pesticides or chemical 2. Operations: control of suppliers’ agents and entire collections made of sustainable responsible policies. clothing, with more then 15 million items of clothing 3. Logistics: sustainable mobility plans manufactured worldwide in 2006, and it is developing following the principles of Kioto. a project for ecological shoe design, in line with what 4. Sales: teaching for a more responsible Camper, another Spanish company, is also doing. way of consumption. To end this section, one must highlight the task ‘The objective of green developed by Inditex in the permanent control of label is to analyze the its supply chain, specified in its Code of Conduct for Manufacturers and External Workshops, structured lifecycle to understand the around respect, control or eradication of 10 key points: impact from the cultivation 1. Forced labor. of raw materials and the 2. Child labor. design, to the manufacture 3. Discrimination. 4. Freedom of association and collective bargaining. and final recycling.’ 5. Abuse or inhuman treatment. The objective, ultimately, is to analyze the 6. Security and hygiene. entire lifecycle of the product to understand the 7. Payment of salary. environmental impact which Zara has from the 8. Working hours. cultivation of raw materials and the design, to the 9. Environmental commitment. manufacture and final recycling, looking for an 10. Regular work. approach to sustainability centered on the client and educating new consumers (especially in emerging The green label and care markets) to consume in a different manner than until for the environment now in the West. In relation to the consumer and the tractor effect that it can exert so that the entire supply chain applies Conclusions: to integrate CSR to the maximum extent and with the maximum management in the business model attention to detail the sustainable principles that Managing Corporate Social Responsibility entails form part of CSR, Zara has incorporated on the label integrating social, labor and human rights concerns of its products the ecological information about its within companies management, giving rise to manufacture, the materials used and what type of policies, strategies, procedures and business models treatments applied, in line with what retail stores which satisfy consumers, as in Zara’s case, because in had already carried out also with clothing, but going the end CSR has to answer an important question: further in order to achieve something that until now what type of society do we want to build and what seemed impossible: being fashionable without giving role do companies play in it? up respect for environment. That is the slogan of ecological clothing. Cases 3
  4. 4. ©2011, Corporate Excellence - Centre for Reputation LeadershipBusiness foundation created by large companies to professionalize the management of intangible assets and contribute to the developmentof strong brands, with good reputation and able to compete in the global market. Its mission is to be the driver which leads and consolidatesthe professional management of reputation as a strategic resource that guides and creates value for companies throughout the world.Legal NoticeThis document is property of the Corporate Excellence - Centre for Reputation Leadership and has as its objective to share businessknowledge about Brand, Reputation, Communication and Public Affairs Management.This document is directed exclusively towards its addressee and contains confidential information, subject to professional secrecy, whosedisclosure, copy or non-authorized use is against the Law. If you receive this document by mistake, let us know immediately and erase itwithout keeping a copy.Corporate Excellence - Centre for Reputation Leadership is the owner of all the intellectual property rights of the images, texts, designsand any other content or elements of this product and has the necessary permission for its use, and therefore, its copy, distribution, publicrelease or transformation is prohibited, without express authorization from the owner.